Monthly Labor Cost per Person 6.13 Million Won... Bonus Reduction Leads to Lowest Increase Rate in 3 Years

Ministry of Employment and Labor Announces Survey on Labor Costs in Enterprises

Last year, the average monthly labor cost per regular employee was 6,131,000 KRW, marking a 1.9% increase compared to the previous year. However, due to a reduction in various expenses such as bonuses and retirement benefits, the growth rate was the lowest since 2020 (1.3%).

The Ministry of Employment and Labor announced the '2023 Fiscal Year Enterprise Labor Cost Survey' on the 30th. This survey aimed to examine the overall costs incurred by corporate enterprises with 10 or more regular employees in employing regular workers.

On the 23rd, office workers are seen commuting wearing long sleeves and outerwear at the Sejongno intersection in Jongno-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Last year, the average monthly labor cost per regular employee was 6,131,000 KRW, a 1.9% increase from the previous year (6,016,000 KRW). Among these, direct labor costs such as wages increased by 2.7% to 4,893,000 KRW, accounting for 79.8% of the total labor cost. In contrast, indirect labor costs such as retirement benefits decreased by 1.1% to 1,238,000 KRW, making up 20.2% of the total.

Looking at the annual growth rates of average monthly labor costs, last year's growth was smaller than in 2021 (8.2%) and 2022 (2.8%). The Ministry of Employment and Labor explained, "the growth rate of direct labor costs slowed due to decreases in bonuses and performance incentives," and added, "indirect labor costs also declined due to reductions in expenses such as retirement benefits."

By industry, the average monthly labor costs were highest in the following order: ▲Finance and Insurance (10,489,000 KRW) ▲Electricity, Gas, Steam, and Air Conditioning Supply (9,604,000 KRW) ▲Manufacturing (6,958,000 KRW). However, in the Finance and Insurance and Manufacturing sectors, the growth rate of labor costs slowed compared to previous years due to poor performance last year.

By company size, enterprises with fewer than 300 employees had an average monthly labor cost per person of 5,086,000 KRW, a 5.3% increase from the previous year. Conversely, enterprises with 300 or more employees recorded 7,532,000 KRW, a 1.0% decrease. The Ministry explained that the decline in companies with 300 or more employees was due to "reductions in expenses such as bonuses, performance incentives, and retirement benefits."

As a result, last year, the labor cost of enterprises with fewer than 300 employees was 67.5% of that of enterprises with 300 or more employees, up 4.0 percentage points from the previous year (63.5%). This figure is also higher than that of 2021 (67.3%). Specifically, the relative levels of direct and indirect labor costs were 71.2% and 54.5%, respectively, both increasing compared to the previous year.